Bona Fide Error

Loading the player...

DEFINITION of 'Bona Fide Error'

An error that was unintentional; an "honest error." If a bona fide error is corrected immediately, then a defendant may not be liable for an action.

For example, under the Truth in Lending Act, a creditor can avoid liability by demonstrating that a violation was unintentional and was caused by a bona fide error, including clerical, calculation, computer malfunction or printing error. An error in legal judgment, however, is not ordinarily considered a bona fide error.

BREAKING DOWN 'Bona Fide Error'

Bona fide is a Latin phrase that means "in good faith," and thus sincere or honest. It can also mean authentic or genuine; a bona fide Van Gogh is a painting by Van Gogh. The various uses of bona fide reflect these meanings. For example, a bona fide resident is someone who resides, continuously and without interruption, for a certain minimum period of time.

RELATED TERMS
  1. Error Of Principle

    An accounting mistake in which an entry is recorded in the incorrect ...
  2. Non-Sampling Error

    A statistical error caused by human error to which a specific ...
  3. Form 8689: Allocation Of Individual ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  4. Rounding Error

    A mathematical miscalculation caused by altering a number to ...
  5. Fat Finger Error

    A human error caused by pressing the wrong key when using a computer ...
  6. Type I Error

    A type of error that occurs when a null hypothesis is rejected ...
Related Articles
  1. Investing News

    3 Reasons Tracking Error Matters

    Discover three ways investors can use tracking error to measure performance for a mutual fund or ETF, whether indexed or actively managed.
  2. Fundamental Analysis

    Calculating Tracking Error

    Tracking error is the difference between the return on a portfolio or fund, and the benchmark it is expected to mirror (or track).
  3. Insurance

    What Does Errors and Omissions Insurance Cover?

    Errors and omissions insurance protects companies and individuals against claims made by clients for inadequate work or negligent actions.
  4. Fundamental Analysis

    Explaining Standard Error

    Standard error is a statistical term that measures the accuracy with which a sample represents a population.
  5. Investing

    9 Cognitive Biases That Affect Your Business

    Human beings often act irrationally when it comes to business decisions. Behavioral finance explains the difference between what we should do and what we do.
  6. Credit & Loans

    There's Help Coming For Your Credit Report

    Soon, there will be another body protecting consumers when it comes to credit scores. Here are some new things to know about getting a credit report in the future.
  7. Economics

    What is Inherent Risk?

    Inherent risk is the possibility of inaccurate information appearing in a financial statement due to factors such as error or omission.
  8. Trading Strategies

    Trend Tips For Every Type Of Trader

    Profitable trading opportunities unfold with specific time requirements.
  9. Stock Analysis

    3 Debt-Free Internet Stocks

    Most companies have been retooling since the economic maelstrom in 2009, but it's nice to see online companies that have built up balance sheets that look like solid manufacturing names, writes ...
  10. Credit & Loans

    The 4 Worst Reasons For A Cash Advance

    They're convenient, especially in an emergency. But that's about the only good thing you can say about taking a cash advance. Here's why.
RELATED FAQS
  1. How is the standard error used in trading?

    Understand how the standard error is used in statistics and what it measures. Learn how the standard error is used in trading ... Read Answer >>
  2. How can I calculate the tracking error of an ETF or indexed mutual fund?

    Understand what tracking error is and learn about the significant difference it can represent for investors who favor index ... Read Answer >>
  3. How do I fix an error on my credit report?

    Take control over your credit report by disputing false claims, accounts and information to the three major credit reporting ... Read Answer >>
  4. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (unless exempt), including what's earned outside the U.S., is usually ... Read Answer >>
  5. In what situations would a loan to an S Corporation from one of its principals be ...

    Learn how creating a debt agreement is the key to ensuring a principal's loan to an S corporation is not classified as an ... Read Answer >>
  6. What happens if a software glitch fails to execute the strike price I set?

    Find out why trading software can be a double-edged sword, and learn what to do if your trade isn't executed because of a ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center